STUDY ON PRE-LOAN EVOLUTIONARY STABLE STRATEGY OF BANK-ENTERPRISE FOR PREVENTING MORAL HAZARD
Qiuhong Zheng1, 2, Liangrong Song1
1Business School, University of Shanghai for Science & Technology, Shanghai, China, 200093
2College of Computer Science and Information Technology, Zhejiang Wanli University, Ningbo, China, 315100
Based on the information asymmetry between enterprises and banks at the stage of loan application, a replicator dynamic model of bank-enterprise evolution at the pre-loan stage was established and analysed by using the evolutionary game theory (EGT) and the stability theory of nonlinear differential equation. A numerical simulation was also performed in details, which displayed intuitively how banks and enterprises achieved stable cooperation through long-term evolution. The results showed that, to effectively prevent pre-loan moral hazard, it was vitally important for commercial banks to improve their screening ability, increase disguised costs of enterprises, and formulate proper sanctions and appropriate amounts of penalty as per the local loan atmosphere also with the profit which the loan investment projects will make.